A New Monetary System
Biographical Sketch of the Author.
As an introduction to the fifth edition of my fathers work, and in compliance with repeated requests, I shall offer a sketch though it must be an imperfect one of his life; chiefly for the sake of telling why and how this book was written.
Edward Kellogg was born at Norwalk, Conn., on the 18th day of October, 1790. He was the son of a substantial farmer, enjoying the comforts of life; each child of the numerous family, however, was expected to do its part toward the common support; and he was early set at work, bringing the cows from the pasture, riding the horse while his older brother ploughed, and doing, when he was ten years old, half a mans work hoeing corn. The hired men who harvested for his father, observing the lads deep set, deep blue eyes, said to each other in their homely phrase that he would make a smart man. Soon after he was of age, he began to buy goods in New York and sell them to country storekeepers in New Jersey, Pennsylvania, Maryland and Virginia, learning a great deal about, men and things in the journeys he made for this purpose. In 1817 he married Esther F. Warner, daughter of Lyman Warner, of Northfield, in his native State. Two or three years later he was established in New York as a wholesale dry goods merchant; soon as senior partner of the firm of Kellogg & Baldwin, and later as chief of the firm of Edward Kellogg & Co. of Pearl street.
When he was about thirty years old his mind was deeply wrought upon by questions of theology and morals, and reading the Bible only, he abandoned the so-called orthodox tenets; when matters of business were not immediately before him, he studied ardently in his own thoughts the relations of man to his Creator and to his fellow man; on his way from one engagement to another, he usually pondered the meaning of some text of Scripture. He read very few books, but he talked much with other men, and always weighted new thoughts that were thrown out. Singularly fearless and free in mind, he was continually investigating opinions to ascertain whether they were true; and whenever he had learned anything he was quick to communicate it to others. But he chiefly sought to draw out their minds and induce them to think for themselves. To this end he used to talk much with young persons; and, in the intervals of business, with the young men who were employed in his counting-house. His thirst for knowledge was so great that he seriously contemplated giving up business and devoting himself to study. At the same time he was eminently practical. No facilities then existed for ascertaining quickly the commercial standing of men, and the firm often sold on credit to persons living in remote parts of the South and West. When a new customer appeared the clerks would call Mr. Kellogg to talk with him a few minutes, and then he would say whether to sell or not. One of these young men, who learned business under him and is now the president of a national bank in the city of New York, says of him : He was the best judge of men that I ever knew; his judgment of them was almost infallible. A man of stainless character and reputation, he conducted a large business with honor and success. His advice was frequently sought by younger men; and he was called upon to fill various offices of trust. During those years he did not speak of business matters at home, but he talked much with friends and neighbors about theological doctrines, principles of morality, about political questions and the management of the banks. As a child I used to sit down near him to listen, being greatly attracted by his animated and earnest discourse.
In 1837, the financial panic occurring, he was unable to make collections from his debtors, and, though having assets largely in excess of his liabilities, was obliged to suspend payment, and saw his affairs thrown into what seemed to be almost inextricable confusion. But, gifted with indomitable energy and courage, he met misfortune for himself unflinchingly; maintaining his integrity and reputation, saying afterward, If I lost everything I had, I was determined not to lose myself. When an old acquaintance, who died a few years ago leaving a princely fortune, came one evening with his wife to drink tea and said, in lugubrious tones, Mr. Kellogg, what are we coming to? my father instantly replied in his pleasant way, It is plain what you and I are coming to, Mr. P.: we are coming to our tow trousers again; whereupon the questioner laughed heartily for the first time since the panic, and they spent a cheerful evening.
Yet, while he thought carefully and anxiously of his obligations and attended faithfully to all that was to be done, his mind turned with earnest and eager inquiry to the cause of the great calamity in which he saw so many involved. He perceived that it was the result of the existing monetary system, and he began to study out the origin of the evils. He soon became convinced that the money of a country, being a public medium of exchange, ought not to be put under the control of private corporations, but ought to be instituted by the government for the benefit of the whole people, and so managed that usury could not be exacted, and that losses in exchange in sending money from one part of the country to another should not be incurred. His soul was moved with indignation at the extortions of usurers, which came continually under his notice; and he caused a friend to write a pamphlet setting forth some facts that he furnished. This was printed in 1841 by Harper & Brothers, and was called Usury and its Effects : A National Bank a Remedy, by Whitehook. His idea then was that a national bank should be created with a capital of fifty millions, with branches in every State, limited in dividends to five or six percent, and compelled when its surplus profits exceeded five percent on the capital to reduce the rate of interest on its loans. He had not yet ascertained the real nature of money nor devised the true remedy.
He still worked in his mind at the problem, for he knew he had not solved it. He saw that money ought not to be made of gold and silver, which cannot be had in sufficient quantities to meet any great financial crisis, and which nobody wants when confidence exists; that it must be a legal representative of value, and thought it ought to be founded on real estate, or on the public credit resting on the national resources; he saw how to issue it in exchange for mortgages of productive real property there was no great public debt but how to redeem it ? He tried it in every way he could imagine; he knew there must be some right way of doing it, but what was it ? it was of no use to point out the evil unless he could show a remedy for it. He thought upon it by night and by day, and at last, after looking for it three years, one night in the spring of 1843, as he lay in his bed revolving once more his problem, it dawned upon him like an inspiration, REDEEM IT WITH A BOND BEARING INTEREST. He turned it to and fro for a moment and exclaimed, in the very words of the old philosopher, I have found it !
Deeply impressed with the value of his discovery, he began at once to write out his ideas. He had only a common school education, and, as he used to say, very little of that! He thought himself the furthest man in the world from writing a book. He disliked to write letters, and made his clerks write for him if possible. But now, morning and evening in the midst of his family, and in moments snatched from business at his counting-house, he set down upon paper the new and stirring thoughts with which his mind overflowed. He had ever been apt to teach, adapting himself carefully to the minds of others, and taking the greatest pains to make facts and ideas intelligible to them; and he wrote simply and vividly. But thinking some revision was desirable, and not having the time nor the practice to do it easily himself, he caused one of the young men in his employment to copy and amend for him. One evening I was then seventeen years old and was always hovering about him he showed me some leaves of the manuscript. In my secret heart I thought the amendments were not well made; but I only said to my beloved father, I think I could do that ! A little surprised, he rejoined, Do you ? well, you may try. The next morning he left some pages with me; at night I had a copy ready for him, which he altogether approved; and from that day I became his scribe, and presently his devout disciple. He was intensely moved by the wrongs that he saw everywhere weighing on the workers of the world through this gigantic, hidden power of money; he knew he had devised the means to overthrow this power, so he worked on at a white heat. Now his relatives and friends began to remonstrate with him. One man of mark, a lifelong friend whom he greatly valued, said to him : Mr. Kellogg, this is the most difficult part of political economy; no one has ever understood it. It has puzzled the wisest heads from the beginning until now, and you cannot solve it : you will only succeed in bewildering yourself. Besides, your own affairs are in a very perplexing condition and require all your attention; and it is against your interest to do anything about it. To which he replied : I have an interest in the human family, and I have discovered something that is for their benefit. I shall write it; I should if I knew that I could make a million of dollars if I did not; and that if I did, I should live on a crust of bread and die in a garret. So the writing went on.
About the last of July, 1843, enough had been written to cover, as he thought, the important points. He cast about to see whom he could interest in it, and how he should get it printed. Having a high opinion of Mr. Horace Greeleys character and benevolent aims he invited him to come and hear it read. Mr. Greeley, ever prompt to consider any proposition for bettering the condition of mankind, accordingly came twice to Brooklyn whither the author had removed in 1838 and my father assigned to me the pleasant task of reading the manuscript to him. The good man, heard it through, and said it ought to be published: he seized upon it and carried it away with him, giving it, with my fathers consent, to Burgess & Stringer, 222 Broadway, to be published. It was printed at the authors cost, in newspaper form, of which, so far as I know, only the one copy now in my possession is extant. It was entitled, Usury: the Evil and the Remedy; and contained the following paragraphs, this being the original of what is now attributed to many different persons and called the interchangeable bonds and money proposition. I quote as follows :
For the purpose I have before mentioned [to supply the people with a good and sound currency], the United States should establish an institution, which I shall here call a Safety Fund. I give it this name because I think it will be the means of securing to the producers a fair remuneration for their productions. It will save us from the power of any foreign nation over our Internal Improvements; or anything else of great importance. It will enable the nation as far as man can have such control to decide its own destiny. Therefore it will be a NATIONAL SAFETY FUND.
In order to explain the nature of this Safety Fund, I will here write out, in full, two bills, one for a circulating medium, the other for a Treasury Note. By reading these the system may be almost entirely understood. Should such an institution be established, the bills might be more brief, as the laws on the subject would be known, and it would be unnecessary to have as much expressed as in the following :
(Circulating Medium, or Safety Fund Note.)
The United States promise to pay to A. B., or bearer, at their Safety Fund, in the City of - One Hundred Dollars, in a Treasury Note, bearing interest at the rate of two percent per annum, payable half-yearly in gold or silver coin; and until such payment is made this note shall be a legal tender for debts, the same as gold and silver coins are now a tender.
One year from the first day of May next, or any time thereafter, the UNITED STATES promise to pay to A. B., or bearer, in the City of , One Hundred Dollars, in Safety Fund Notes; and until such payment is made, to pay interest thereon half-yearly on the first days of May and November, at the rate of two percent per annum in gold or silver.
It will be perceived that the note intended as a circulating medium is made a tender for all debts, that it is issued by Government, and payable in Treasury Notes. The Treasury Notes are to bear interest; hence there can be no money in circulation but what the holder can at any time put on interest where the loan would be entirely safe, and the interest payable half-yearly in specie; so that money can, at all times, be loaned for a certain income secured by the nation. One year after the first of May ensuing, the holder can convert the loan again into the legal currency of the country, so there never can be a surplus of money which may not be made productive.
The newspaper contains no date of publication, but the leading article of the New York Tribune of August 17, 1843, evidently from the pen of Mr. Greeley, had the heading, Usury: the Evil and the Remedy, and began, Such is the title of a powerful essay which has recently been published in this city, in a cheap newspaper form designed for general circulation. The intent of the author is evidently to probe the evil to the bottom, and not to rest in mere grumbling at it, but devise and suggest adequate means for its removal. The main features of the plan are clearly and forcibly stated in this article, with a recommendation to all who think excessive interest an evil to procure and read the paper.
My father then did his utmost to circulate the essay. He sent it to many editors, the paper itself containing a request that they would copy parts of it for the good of the public. On the 28th of October of the same year, a synopsis of it in four columns was printed in the Tribune; and, in December of the same year, it was issued, at his cost, as a supplement to the New York Commercial Advertiser. Then he had it put in pamphlet form, with some additions, and stereotyped. It was called Currency : the Evil and the Remedy, by Godek Gardwell, these words containing the letters of his name.
About this time or a little later, he gave up business as a merchant, and, retaining an office in New York, spent his time in the care and improvement of his property. He continued to think and to write on the money question. Sometimes he wrote at length, but oftener a few pages only on any point that was in his mind. When a good idea occurred to him he set it down, sometimes the same in slightly varied form appeared often, especially in regard to the representative value of money. The subject was so important, the need of clear ideas and simple illustrations to combat the old errors so evident, it was all so urgent that he could not say it too emphatically or too much. Then the subject ramified in such a way; it was so vast, touching upon most of the material interests of men; it lay at the foundation of public justice and good morals: the new system was capable of effecting a beneficent revolution, and would, too, by and by. All these things and more were seeking expression. His mind worked so deeply that he often went along the street, noticing nobody, seeing only the idea that he was pursuing and endeavoring to seize.
Some time after the essay was published, when he had a mass of papers thus written, various in subject and length, he told me he wanted me to arrange them in some order, copy, and get the whole ready for the printer. Though dismayed at being called upon to set in order the subject-matter, it did not occur to me to say I could not do it; I must at least try, if my father expected it. After a time I thought I saw the proper sequence of the argument, and sorted and arranged the papers in chapters and sections accordingly. Perhaps a less formal mode might have been better; but the author himself found no fault with it: he, with his originating mind, would rather write ten than arrange one; and he was occupied in searching out ideas and principles. Almost every day there was something new; a page or two came home on the back of a letter or on a sheet of paper doubled up in his pocket, and must be assigned to the proper place; sometimes a section rewritten because the new was better, or to introduce fitly a fresh idea or illustration; then a large part of the chapter on the banking system was written. I used to go over it all again and again by myself during the days while he was away at his office, occasionally suggesting the writing of something on this or that point to fill out the course of thought; and in the evenings and on Sundays he read it over, or we read it over together; sometimes spending hours on a single paragraph, to make it clear and simple. Unwearying thought and care were bestowed on the whole; but the chapter on the nature of money received specially vigilant and repeated revision. For recreation we used to talk together, often into the midnight hours, of the blessings that would flow to mankind from this grand new truth; and we said, that some day the nature of money would be so well understood, and the system so much a matter of course, that people would wonder it had ever been needful to write such a book, or take such pains to argue the question. When it was nearly finished he invited a friend to hear it read, who suggested further omissions and condensations. Then my father went over it several times more, always making some emendations, and five years from the time he began to write it, it was copied out for the printer; containing then in substance all and in length about one-third of the original matter.
The book was published in the winter of 1848-49, under the title of Labor and other Capital: the rights of each secured and the wrongs of both eradicated; or, an exposition of the cause why few are wealthy and many poor, and the delineation of a system which, without infringing the rights of property, will give to labor its just reward. By Edward Kellogg. It was stereotyped and printed at his expense, and he had it for sale at his office, then at 47 Stone street.
He hoped he had now written something that would awaken the public attention and direct it to this momentous question; but his book failed to attract much notice, and his plan was called visionary, impracticable, Utopian. Here and there a man read it who perceived its power. One old friend of his, president of a bank in Maryland, said, Mr. Kellogg, I have read your book, and it is all true, every word of it; but nobody will buy it, nobody will read it, and it will lie on the shelf : but if you will write one on the other side of the question, it will go like hot cakes. A year or two after it was printed, a gentleman, to whom he had lent a copy, said to him, Mr. Kellogg, your book is true; it is in advance of the time, and the people of this generation do not appreciate it; but future generations will raise monuments to your memory. An editor, too, said to him, Do you know that this book of yours is the most radical one that ever was written ? Yes, he knew it, nothing was new to him in regard to the deep-reaching nature of his work. He remarked, This will break down every despotism. As soon as the system is adopted in this country and its results are seen, the people of other countries will compel their governments to establish it; these principles are of universal application, and will be ultimately adopted by all nations; then a nation shall be born in a day. This last was a favorite expression with him; he often quoted texts of Scripture in connection with his pain. He said, too, They cannot bring me any question relating to this subject that I cannot answer, when I have had a little time to consider it.
At various times he had written papers expressly for certain public men, setting forth the advantages of his project, hoping to gain the ear of some one who might speak of it effectively to the people. He wrote to Henry Clay, and paid him a visit, making a great effort to interest him; but nobody cared for this newly-discovered truth. He spoke often of the oppression of the laboring classes of England, and wrote an article showing how to remedy it, which he sent to the London Economist, but it was not printed. When the book was first published he sent it to Proudhon, and the prominent members of the French Assembly, as well as to other statesmen in foreign countries; ever hoping somebody might perceive its worth, who would endeavor to put it in practice for the good of the people. He placed it in the hands of editors, members of Congress, and Cabinet officers at home. He used to say, Some men tell me this is a very good theory, but it would not work in practice; but a theory is of no value unless it can be put in practice; the practicability of a theory and the good results flowing from it are what make any theory valuable. It burdened his soul that he could not make men understand, nor even fairly look at a subject laden with the liberty and well-being of mankind. The few instances I have noted are almost the only ones I can recall of a cordial recognition of his work.
He continued to write occasionally when some fresh thought or striking illustration occurred to him; and he spoke of making a new book; thinking again that perhaps he could produce something different in expression and illustration, yet the same in principle, which would reach the public ear. But when he considered that the people were not yet alive to the importance of a better monetary system, and that a great deal of thought and labor had been given to the book, he resolved to take it as a basis, and make it more valuable and interesting by incorporating the new matter with it. Remarking to him once in reference to a passage, Father, that is so simple it does not seem as if there were any need of saying it, he replied, It is perfectly simple; but people do not know it. And, What astonishes me is that no one has ever found this out before. I cannot see how the world has gone on so long without anyone understanding the real nature of money. I do not need to hear the history of the monetary laws of nations. If I take the present condition of the people, I can tell pretty nearly what sort of money they have had. Political economists fill their books with accounts of things as they are, but they do not show us any means by which the old evils they depict can be done away. Sometimes he used to call money, because of its present elusive, deceitful, and hidden power, a money-devil, and say that it ought to be chained, so that it could not devour the substance of the producers.
He was the most companionable of men : and though his conversation naturally turned to matters of government, law, or religion, he liked lighter topics too; was quick at repartee, could tell a good story, was fond of games, and ever loved a joke. He had a great respect for the common mind; he loved little children and tenderly drew out their thoughts : he had a lively sympathy for the pleasures and occupations of others, and everybody could do his best in that cheerful and inspiriting presence. He was withal a man of an unusually beautiful and dignified aspect; of a manly form, above the middle height, having finely cut features, a pure red and white complexion, dark blue eyes, a firm mouth, and soft gray hair lying in abundance on a noble head. His countenance was expressive of power, refinement and benevolence. When he was conversing on some of his favorite topics, and especially when speaking of the excellent results to flow from just laws, his face sometimes assumed the innocent and joyful expression of a child. The moral effect of his system was always uppermost with him. While he foresaw, perhaps as few others can, the physical benefits to follow upon its establishment, the prospect of peace and good-will among men was the one which most delighted him. The millennium can never come, he would say, until this system goes into operation; but then it can come! The foundation of contracts being laid in justice, order and beauty in the state and in society could arise.
As I listened day by day to his conversation, I often thought of making a written memorandum of it, but did not. In arguing a question he frequently began at a distance so remote that one did not see the connection; and as he approached the point, he brought, by means of the train of thought, an unexpectedly great force to bear, carrying conviction to the mind of his hearer. He talked of righteousness, and of justice and mercy, drawing much from the Bible : how often he quoted, Justice and mercy have met together; adding, There is no justice without mercy; it is just to be merciful. He said he had thought a very great deal more about religion than he ever had about the currency, and that he could not have written the book if his mind had not been free on religious subjects. He spoke of writing a book on faith, but he never began it. He said, too, that he could write a code of laws; but he always added, When my system goes into operation the laws will be very simple; they will be few and easily understood; there will be much less litigation. He remarked that if the laws were just it would not make much difference which political party administered them. He conceived that party strife would be diminished; that legislative bodies would come together less frequently, and he inclined to favor direct taxation for government expenses. He said it was supposed that a country might be so wide, and a nation so numerous as to fall apart because of the bulk, but if the laws were just, and a true system of money were instituted, the country might enlarge and the people multiply without disadvantage.
It was during the later years of his life, while his mind was occupied with these subjects; that a committee of gentlemen invited him to take the presidency of a bank, urging that if he would consent, such confidence was felt in his management that the stock would be taken immediately; and the United States Government appointed him to appraise the value of some lands, but he declined these offices, as he had previously declined a minor political one. I mention these otherwise trivial incidents to show his reputation as a practical man.
In the summer of 1857 it became evident that his hitherto vigorous health was declining, and a few months later the presence of a painful and fatal disease was disclosed. During the financial pressure of the autumn he felt intensely for the general suffering, which, in his then weak condition, seemed almost beyond his endurance; and said, It is not the trouble in my own affairs, but it is the cause of these calamities that wears me out. He wrote an article for the New York Tribune, copied in the appendix of this book. The announcement of his approaching departure he received with the equanimity that distinguished him; saying, It is usually our duty to prepare for life, but circumstances change; there is a debt of nature that we all must pay, and I have considered our duty in relation to it for many years; and it does not alarm me at allnot a bit. I shall still be in the presence of the same Being before whom I have lived; there will be no change in that.
He continued to go to his office as his strength permitted, and to attend to his affairs. At home he caused me to read his book through to him, after the lapse of seven or eight years listening to it with marked satisfaction, and saying that it was much better than he had thought it. When we came to the passage where it is said that those who neither lend nor borrow money, and have not the mental grasp to understand how the rate of interest affects the reward of their labor, shall yet benefit by the institution of the new system, he was visibly affected, and said, If I did not know who wrote that book I should say, that sounds like Christian legislation! He changed the title for the present one, made some amendments, dictated a few paragraphs, and from time to time spoke to me of some points which he desired to have enforced; especially that the rate of interest ought not to exceed the expense of instituting and circulating the money; hut he added that at one percent it could not be made oppressive to the producers. He had previously said that no doubt an attempt would be made to lower the rate of interest gradually; but, in his judgment, it would be much better to bring it at once to the just standard; then every thing would adjust itself to that, and there would not be a series of readjustments consequent upon lower and lower rates, He said, If there should be a war in this country, my system would be much more likely to go into operation; for the government would be compelled to issue a large amount of paper money to carry it on. In those days of physical weakness and suffering, when greatly oppressed by the general lack of appreciation for this truth, it soothed him to have me talk to him with faith and hope of the coming day of recognition for it. I promised him that I would print a new edition of his work, and make additions to it from his manuscripts. He gave me all his manuscripts, though long ago I had often said to him that those were my perquisite, valuing them highly, and he had assented, remarking, There are some good ideas in those old papers that you have not got out yet. But now he gave them to me definitely, and the copyright, and all the remaining copies of the essay and the book and I received them as one who takes a sacred trust for the people. He said, Mary, I love my friends, I love my family; I take a great interest in their welfare; but I care more for that book than for anything else, it is of such vast importance to the world.
Soon after this he could no more go out, nor go to his writing-room, and for three weeks his family watched beside his dying-bed. He bore intense suffering with resolution and uncomplaining fortitude. Once as he lay apparently asleep I heard him say, That is shortly expressed, and asking what he had said, he replied, smiling, I was dreaming about usury, I guess. Again when I heard some word, he said again, I was dreaming pleasant dreams all my thoughts are pleasant. To an old and valued orthodox friend, who, knowing he did not hold the usually received religious opinions, asked him how he should appear before a just God, he replied, in tones of solemn sweetness and serenity, In regard to that I feel a perfect peace. You may think strange of it, Judge, but I do. Each day until the very close he gave directions respecting his affairs; in the extremity of death he did not neglect to greet a friend; and in perfect possession of his faculties up to the instant of his departure, on the 29th day of April, 1858, this great soul went hence.
We who sat beside him day and night, and saw his grand composure, could but think of the old philosophers, to whom, in mind, he always seemed to me akin. My spirit went up with him to the company of the saints and reformers of every age. We laid the wasted body in a grave on Chestnut Hill in the Greenwood Cemetery; but not until a cast of his head had been taken, that the sculptor might reproduce in marble his lineaments, for those who shall some day desire to see his face.
I have now told, according to my ability, who and what he was who wrote this book, and how he was moved thereto; trusting that it may comfort and encourage those who are to endure the stress of the coming struggle; that they may know more intimately their pure and benign leader, to whom was denied this conflict which he so ardently sought; that he was not a closet thinker, as some have called him, but up to the close of a long life actively engaged in affairs; mingling freely with men and partaking of the ordinary cares and joys; though having endured toil and hardship, not a disappointed, but, in the main, a successful man; known to most of his business acquaintances in no capacity but as one of themselves, yet, with his deep nature, having, as he himself said, an inspiration of the truth on this all-important subject. In closing I must add, that a few days before his death I said something to him, I do not remember what, about writing some recollections of his life, and he answered me, I dont think much of these biographies. Every child thinks its own father and mother the best in the world. My book will show what my character was.
M.K.P.Elizabeth, N.J., December, 1874.
1 [xxii/*] Those who proposed and carried the legal tender act [Portland Chase, Gerry Spaulding, Samuel Hooper, John Sherman] can tell what strength they derived from the facts and arguments of the New Monetary System, which was freely circulated among members of Congress and others at Washington.